A very interesting thread by trade policy expert Peter Ungphakorn on whether it is correct to compare the World Trade Organisation to the European Union. Spoiler: they are incomparable.


First published in February 2020.

A number of people have questioned this 👇🏽

The argument goes: Since a pro-Brexit view is the UK can fare just as well under WTO rules as it can as an EU member, it’s valid to compare the two.

But trying to understand the two through the lens of Brexit is misleading.

Why?

It is valid to compare the impacts of operating under WTO rules alone, with the impact of EU membership or any other UK-EU relationship.

PMP XTRA

Brexit: the long-term impact on UK and EU economies. / The UK in a Changing Europe

But it is misleading to compare the two as organisations.

Since the UK, EU and EU member states are all WTO members, WTO rules always apply to all of them, non matter what the UK-EU relationship is, or even if there is no trade relationship.

Any UK-EU relationship is built on top of WTO rules.

The false comparison leads to false questions like: “The EU has an elected parliament. Where are our elected representatives in the WTO to scrutinise WTO rules?”

PMP XTRA

A 'WTO deal' Brexit? / Trade Beta Blog

The simple answer: For the UK they are in the House of Commons.

Why the House of Commons? Because WTO “rules” are really agreements negotiated by governments — only by those governments.

Once agreed, there is nothing to force governments to write them into their laws, only possible retaliation by other members.

How the WTO deals with problem trade measures — it’s not just dispute settlement. / Trade Beta Blog

But governments do generally adapt their laws to meet WTO obligations. It is voluntary, never automatic.

In the UK, those laws are scrutinised by the House of Commons.

PMP XTRA

Here’s why governments voluntarily comply with their WTO obligations... / Trade Beta Blog

Also a false comparison: Leaving the EU means replacing the European Court of Justice (ECJ/CJEU) with WTO dispute settlement.

(a) As a WTO member, the UK is always subject to WTO dispute settlement/Appellate Body.

(Here’s a case the UK lost.)

(b) Lawyers tell us that under EU treaties, its member states accept the supremacy of EU law (in some areas) and rulings of the ECJ.

There is no legal equivalent in WTO agreements. Members simply commit to comply. Nothing can force them to do so.

PMP XTRA

Does EU law take precedence over UK law? / The UK in a Changing Europe

The WTO is more or less just a meeting place.

The EU is much more. It has a Commission with executive powers, a budget that is deeply involved in economic and other activities and a legislature.

The WTO has none of those.

What is the WTO? And is it undemocratic? / Trade Beta Blog

This is an organisation chart of the European Union:

The European Union. / Wikimedia - 111Alleskönner

And this is an organisation chart of the World Trade Organisation.

It consists entirely of meetings of the membership.

The World Trade Organisation. / Trade Beta Blog

The EU and WTO charts are incomparable.


Tweets posted on 10 February 2020 by @CoppetainPU.

Further reading:

The European Union and the World Trade Organisation






[This piece was first published as a Twitter thread and turned into the above article on 12 February 2020 with the purpose of reaching a larger audience. It has been minorly edited and corrected. | The author of the tweets writes in a personal capacity.]

(Cover: EU / WTO flags.)